The Bridgewater Golf Commission would have sued the town if the Town Council had turned down its request for a $100,000 supplemental payment to get through the remainder of the fiscal year, Golf Commissioner Dan Mahoney said.

He said the golf course would be in good financial shape if the town hadn’t raided its reserve account repeatedly over the past decade.

“The town’s taxpayers have never paid a penny to the golf course. The Council is just giving back the money that was taken,” Mahoney said.

Rebecca Hyman

The Bridgewater Golf Commission would have sued the town if the Town Council had turned down its request for a $100,000 supplemental payment to get through the remainder of the fiscal year, Golf Commissioner Dan Mahoney said.

He said the golf course would be in good financial shape if the town hadn’t raided its reserve account repeatedly over the past decade.

“The town’s taxpayers have never paid a penny to the golf course. The Council is just giving back the money that was taken,” Mahoney said.

Councilors unanimously approved a $100,000 transfer to the golf course at their April 23 meeting. But they said they’d be keeping a close eye on the municipally-owned enterprise’s finances.

“If we continue down this road where it’s not living within its means, changes will have to be made,” Councilor Michael Berolini said.

But Mahoney said the golf course is living within its means.

He said a reserve fund of $700,000 was earmarked for the golf course when the facility was constructed in the mid-1990s. Mahoney said he believes the reserve money was borrowed along with the construction money.

The idea was to set up a rainy day fund — a literal necessity for a business as weather dependent as a golf course.

The construction loan has a 20-year term, ending in 2017 and the golf course enterprise account pays about $480,000 a year in debt service out of total revenue of about $1.4 million annually.

Once that’s paid off, the golf course will be a clear moneymaker, everyone seems to agree. The question is what to do in the meantime.

The Council has made several transfers to the golf course over the past couple of years — though altogether they total less than was taken from the golf course reserves, Mahoney said.

The golf course is a so-called “enterprise account.” Enterprise accounts are town departments that take in revenue and are run as self-sufficient entities. In addition to the golf course, they include water, sewer and the transfer station. The town is allowed to charge them for “indirect costs,” such as their share of the accountant’s or town manager’s time.

But beginning around 2004 or 2005 and continuing for about five years, the town started charging the golf course an annual “payment in lieu of taxes” (PILOT) of about $95,000 a year in addition to the indirect services charge, Mahoney said.

Mahoney said that drastically depleted the reserve account, and he does not believe under state law it is allowable to charge an enterprise account a payment in lieu of taxes.

He said former Town Councilor Mike Demos as chairman of the advisory board and later Berolini when he took over that role lead the effort to charge the payment in lieu of taxes, which was part of the budget and approved by town meeting.

Later, Mahoney said, Former Town Manager Troy Clarkson took a different approach but with the same result. Mahoney said Clarkson overstated the indirect costs charged to the golf course beginning in 2011, boosting the annual charge from $25,000 to $100,000.

The calculation included $15,000 for police services and another $15,000 for fire services used by the golf course, numbers Mahoney called absurd.

“It was magic accounting,” Mahoney said.

In this case, Demos and Berolini spoke up in defense of the golf course, questioning whether Clarkson’s dramatic increase in indirect costs was justifiable — or affordable.

Much of the history of the golf course predates Town Manager Michael Dutton’s tenure.

But he said generally speaking borrowed money may not be used to fund operating expenses. He questioned whether the golf course reserves might not have instead been retained earnings.

And Dutton said enterprise accounts may only keep a limited amount of earnings on hand. The idea is not to run a profit or a loss and to lower rates if large surpluses occur.

Dutton said as he understands it the annual PILOT payment was $70,000 and the $95,000 figure also included the $25,000 for indirect costs.

And he knows of no reason a town may not assess a PILOT payment to an enterprise account — though he has not specifically looked into that question since the payments are no longer being made.

As to the indirect costs, Dutton said he lowered them by 15 percent across the board for all four enterprise accounts in next year’s budget in an attempt to be conservative given the controversy over the increase.

And he intends to examine the calculation for indirects more closely once the budget season is over to ensure a consistent and fair methodology is used going forward. He does not know what he’ll find but does not expect them to go down drastically.

Berolini said the PILOT payments were assessed at a time when the town was facing an economic crisis. And, he said, the figure originated in the accountant’s office not with Demos and himself.

“There wasn’t enough money to run the town. I’ll take $70,000 from the golf course if it means not having to lay off two police officers,” Berolini said.

But, he said, the important question now is whether the golf course can sustain itself going forward.

Dutton said the golf course has become “a highly politicized operation.”

“We’ve got a group of people saying we shouldn’t be giving any money to the golf course and others saying it’s a tremendous asset,” Dutton said.

Dutton said his role is to be the “independent auditor” who can look at the situation with fresh eyes and assess if the course is being run efficiently, on the one hand, and the enterprise account is being treated fairly on the other.